Clarivate Plc · NYSE:CLVT
Clarivate — Investor Day (November 2021)
83 slides from Clarivate's investor day presentation, Nov 9, 2021
Slide 1: Investor Day
Investor Day November 9, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements This communication contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995. These statements, which express management’s current views concerning future business, events, trends, contingencies, financial performance, or fina
Slide 3: Agenda
Agenda Welcome Mark Donohue, Vice President, Investor Relations Presentation: Jerre Stead, Becoming One Clarivate Executive Chairman and Chief Executive Officer Presentation: Kerri Nelson, Delighting Our Customers Chief Operations Officer BREAK – 5 minutes Presentation: Steen Lomholt-Thomsen, Implem
Slide 4: Becoming One Clarivate
Becoming One Clarivate Jerre Stead Chairman and Chief Executive Officer November 9, 2021
Slide 5: Clarivate: Solving complex challenges through innovation and human ingenuity
Clarivate: Solving complex challenges through innovation and human ingenuity With access to globally-trusted content, advanced data science capabilities and deep domain expertise spanning the entire innovation lifecycle, we help our customers change the way they create, protect and advance innovatio
Slide 6: We serve the end-to-end needs of four innovation-intensive customer segments
We serve the end-to-end needs of four innovative-intensive customer segments Manufacturing; Government & Life Sciences & Professional Technology & Academic Healthcare Services Consumer Products1 Academia; Applied Pharma; Healthcare; Consulting; Financial Process and Discrete; R&D; Publishing; Medica
Slide 7: Where we were at the end of 2020
Where we were at the end of 2020 Adjusted Revenue1 Net Loss Adjusted EBITDA1 $1.3B ($312)M $487M Adjusted EBITDA Margin1 Net Cash Operating Activities Adjusted Free Cash Flow1 38% $264M $302M 7 1. See the Appendix for a reconciliation of GAAP to Non-GAAP measures.
Slide 8: Where we are today
Where we are today Adjusted Revenue1 Net Loss Adjusted EBITDA1 $1.3B $1.8B – ($312)M ($73)M – $487M $1.84B ($103)M $795M – $825M Adjusted EBITDA Margin1 Net Cash Operating Activities Adjusted Free Cash Flow1 38% $264M $302M 44% – 45% $450M – $403M – $500M $453M 8 1. See the Appendix for a reconcilia
Slide 9: Purpose, Vision, Mission
Purpose We believe human ingenuity can transform the world and improve our future. Vision We will improve the way the world creates, protects and advances innovation. Mission We are a trusted, indispensable partner to innovators everywhere by delivering critical data, information, workflow solutions
Slide 10: Our virtuous circle keeps us focused and moving forward
Our virtuous circle keeps us focused and moving forward 10
Slide 11: Our culture guides our actions and our focus for 2022
Our culture guides our actions and our focus for 2022 Outside in Place customers first in all we do Teamwork Collaborate, listen, learn and celebrate Action-oriented Focus, simplify and execute 11
Slide 12: Our latest colleague engagement survey had an 88% response rate
Our latest colleague engagement survey had an 88% response rate Strengths 80 – feedback 77 – communication 72 – action taking Opportunities 66 – decision making 70 – growth 70 – belonging 12
Slide 13: Measuring customer delight tells us where to focus our efforts
Measuring customer delight tells us where to focus our efforts 89 – quality of products and services 86 – information and insights 2020 59 – easy to do business with score 76 Overall Customer feedback: customer • Product and information quality make delight = 78 up over 70% of our positive comments
Slide 14: ESG: We have four pillars that guide our focus and actions
ESG: We have four pillars that guide our focus and actions Colleagues Governance Environment Community 14
Slide 15: Since our ESG journey began in 2020, we have made strides forward
Since our ESG journey began in 2020, we have made strides forward Colleagues Governance • Submitted Corporate Equality Index • Board diversity statement published assessment • Modern Slavery Statement revised • Launched DEIB council and 2021 and published scorecard • ISO 27001 certification achieved
Slide 16: Since our ESG journey began in 2020, we have made strides forward
Since our ESG journey began in 2020, we have made strides forward Environment Community • Submitted Carbon Disclosure Project • First volunteer focus month completed; (CDP) assessment 32,000 volunteer hour annual goal • 100 top suppliers invited to • Launched volunteer recognition program participat
Slide 17: Looking forward: We will continue to set goals and make ESG a priority
Looking forward: We will continue to set goals and make ESG one of our highest priorities Colleagues Governance Environment Community • Progress on DEIB • Complete colleague • Finalize Carbon Neutral • Complete volunteer scorecard engagement and approach, cost and goal of 32,000 hours, • Submit Glob
Slide 18: One Clarivate
One Clarivate Our strategy to become outside-in and customer- centric, by focusing on four customer segments With this strategy, we put our customers at the center and move from product focus to customer focus 18
Slide 19: One Clarivate is our strategy to capture growth opportunity
One Clarivate is our strategy to capture growth opportunity while increasing customer delight Addressable market is growing & evolving rapidly… 11% 10% CAGR CAGR Healthcare, Academic, Global patent and Government markets1 trademark applications2 10% Customers face increasingly complex problems CAGR
Slide 20: We have significant addressable opportunity
We have significant addressable opportunity Manufacturing; Tech & Government & Academic Life Sciences & Healthcare Professional Services Consumer Products1 Academia; Applied R&D; Pharma; Healthcare; Consulting; Financial Process and Discrete; Publishing; Gov’t; Medical Devices Services; Law Firms Co
Slide 21: We are driving operational efficiencies
We are driving operational efficiencies • Operational improvements Run-rate savings of $235M • Facilities rationalization exiting 2021 • Digital transformation • In-source application development • Vendor consolidation 21
Slide 22: Business model provides clear path to long-term profitable growth
Business model provides clear path to long-term profitable growth Recurring subscription revenue with high Recurring revenue retention and revenue visibility + profitable ‘Build once, sell many times’ creates incremental growth significant operating leverage Low capital requirements allow high cash
Slide 23: The power of our business model is our available free cash flow
The power of our business model is our available free cash flow Revenue1 $3.0B EBITDA1 $1.4B Capex spend (90% product development) -$165M Cash tax -$65M Free cash flow 1, 2 $1.2B Share buy back Reduce debt Acquisitions 1. Medium-term targets 23 2. Unlevered free cash flow
Slide 24: Reaffirming 2021 guidance
Reaffirming 2021 guidance ($M, except % and per share data) 2021 Adjusted revenue1 $1,800 - $1,840 Adjusted EBITDA1 $795 - $825 Adjusted EBITDA margin %1 44% - 45% Adjusted diluted EPS1 70 - 74 cents Adjusted free cash flow1,2 $450 - $500 1. See the Appendix for a reconciliation of GAAP to Non-GAAP
Slide 25: Our fundamental assets are unmatched
Our fundamental assets are unmatched Business model with strong financial attributes Multiple levers to drive growth, profit and cash flow Products critical to customers’ workflows One Clarivate – intentional actions to address significant white space Strong, purpose-based culture in place with expe
Slide 26: Delighting our Customers
Delighting our Customers Kerri Nelson Chief Operations Officer November 9, 2021
Slide 27: The only reality that matters is our customers' perception of us
The only reality that matters is our customers’ perception of us 27
Slide 28: Our team objective is to make it easy for our customers and colleagues
Our team objective is to make it easy for our customers and colleagues Standardize and simplify processes Improve end-to-end systems to be Be a ONE Stop Shop and be How to drive a “best in class” customer user friendly responsive at each touchpoint experience 1. Customer Care 4. SalesForce.com for S
Slide 29: Centers of Excellence are critical to how we make this happen
Centers of Excellence are critical to how we make this happen Belgrade Chandler India Penang Colleagues 536 116 3935 234 Main Inside Sales, IP, Technology, Inside Sales, Customer IP, Technology, Science Inside Sales, Functions Customer Care Care, Finance Group, Content Customer Care, Content English
Slide 30: We have a rigorous integration discipline
We have a rigorous Integration discipline to ensure consistent approach, clear ownership and impactful outcomes Integration Playbook: First 90 days (post close) • Governance & cadence • Quick-start plan • Roles & responsibilities • Onboarding focus • Standard process & dashboards • 30-60-90 day key
Slide 31: Connected Workplace strategy resulted in $27M cost savings
A great proof point of our Integration capabilities is our Connected Workplace strategy which resulted in $27M cost savings 121 Sites 31
Slide 32: Today, we have a flexible workplace model for 100% of our colleagues
Today, we have a flexible workplace model for 100% of our colleagues 43 Clarivate sites PLUS 3500 3rd party sites 32
Slide 33: 48% of our workplaces are open today with clear operating procedures
48% of our workplaces are open today with clear operating procedures in place Safety First Protocols • 100% Site Leader coverage • Rigorous opening checklist • Social distancing and 6 feet desk spacing • Masks where mandated locally • Vaccines encouraged globally; U.S. required by Dec 8 • Contact tr
Slide 34: Our Connected Workplace efforts include how we listen and engage colleagues
Our Connected Workplace efforts include how we listen and engage colleagues, ensuring we haven’t missed a beat through the pandemic 26 of 43 47% 8,715+ Clarivate offices Colleagues back to Colleagues currently open their workplace 546 105+ Colleagues Make it easy Social / networking events participa
Slide 35: We measure progress based on customers' feedback via Customer Delight survey
We measure our progress based on our customers’ feedback which we gather through our Customer Delight survey Listen Act Communicate • Customer Delight Survey 2 X a year • Customer Delight Scorecard • Customer Delight RSUs • Customer Care and Onboarding • Champion model to drive bottom-up • Customer
Slide 36: Our Customer Delight score is linked to operational and financial metrics
Our Customer Delight score is linked to our operational and financial metrics Focusing on the customer’s need at every interaction Webinar First Contact Product Newsletters attendance Resolution usage Higher Customer Delight Customer Delight +2 points 2021 Customer Customer Higher Delight Delight Ac
Slide 37: We have made progress; with more to do
We have made progress; with more to do Ensure safety of our 8,715+ colleagues globally… and have fun Delight customers at each critical touchpoint with quick, high-quality responses Process our orders faster and with high levels of accuracy Keep scaling Centers of Excellence in order to serve both c
Slide 38: Implementing One Clarivate
Implementing One Clarivate Steen Lomholt-Thomsen Chief Revenue Officer November 9, 2021
Slide 39: One Clarivate: shifting our focus from products to customers
One Clarivate: Our strategy to become outside-in and customer-centric, shifting our focus from products to customers Current stage 1 2019 2 2020 3 2021 4 5 2022 Establish Centers Transform APAC to Transform IP group Define Expand customer- of Excellence for customer-centric to accounts having custom
Slide 40: Serving the end-to-end needs of four large customer segments
Serving the end-to-end needs of four large, innovation-intensive customer segments Consumer, Manufacturing Government & Academic Life Sciences & Healthcare Professional Services & Technology1 Academia; Applied R&D; Pharma; Healthcare; Consulting; Financial Process and Discrete; Publishing; Gov’t; Me
Slide 41: Each segment has clear up/cross-sell growth opportunities
Each customer segment has clear up/cross-sell growth opportunities across the portfolio enabled by new business-only specialists Consumer, Government & Life Sciences & Professional Manufacturing & Academic Healthcare Services Technology 1 Web of Science LSHC Commercialization IP Maintenance IP Maint
Slide 42: Proven example of up/cross-sell driving double-digit account growth
Proven example of up/cross-sell driving double-digit account growth Case study 1: Life Sciences and Healthcare client 38% Clarivate revenue by product ($M) CAGR 4.9M 4.0M 81% Organic 3.4M growth 2.1M 1.4M 2017 2018 2019 2020 2021 # Clarivate 3 3 6 7 7 products 42
Slide 43: Proven example of up/cross-sell driving double-digit account growth
Proven example of up/cross-sell driving double-digit account growth Case study 2: Academic and Government client 23% Clarivate revenue by product ($M) CAGR 3.6M 3.4M 58% Organic 2.3M growth 1.6M 1.7M 2017 2018 2019 2020 2021 # Clarivate 3 3 5 5 5 products 43
Slide 44: Account segmentation optimizes our team selling strategy
Account segmentation optimize our team selling strategy focused on account retention, new business up/cross-sell & new logos Total FY21 projected Account Profile # accounts / revenue ~50 Large & global install base, high-touch engagement Top accounts ~$375M Attractive up/cross-sell opportunities GLO
Slide 45: Our commercial levers and strategic priorities will unlock strong organic growth
Our tactical commercial levers and strategic priorities will unlock strong organic growth 3-year targeted revenue opportunity by customer segment Consumer, Government & Life Sciences & Professional Manufacturing & Academic Healthcare Services Technology Account Retention & Up/Cross-sell ~$250M ~$250
Slide 46: Our customer-centric organization will drive growth opportunities
Our customer-centric organization will drive growth opportunities and support our strategic priorities Customer benefits Clarivate benefits • Strategic partnerships with proven market- • Model empowers the organization, enabling leading organization focused on customer’s faster execution/capture of
Slide 47: Path forward
One Clarivate ensures we operate outside-in and will be in place Jan 1, 2022 Path forward Strategically, the go-to-market model will enable individual scaling of our customer segments Tactical commercial levers: Up/cross-sell, new logos & retention focus unlocks organic growth 47
Slide 48: Building Solutions Across The Clarivate Portfolio
Building Solutions Across The Clarivate Portfolio Mukhtar Ahmed President, Science Group Gordon Samson President, IP Group Stefano Maestri Chief Technology Officer November 9, 2021
Slide 49: From product innovation to customer digital transformation
From product innovation to customer digital transformation Solve real customer and industry challenges Use case: Fortune 100 Utilize customer-centric design thinking consumer goods company Harness power of One Clarivate across IP Portfolio via the ‘Connect’ workflow Demonstrate innovation and produc
Slide 50: Scaling our consulting practice to become a trusted partner
Scaling our consulting practice to become a trusted partner Become integral part of company’s go-forward strategy Use case: Top 30 Deliver of scalable and repeatable managed solutions pharmaceutical company $ Pull through of subscription and reoccurring revenue Benefits and outcomes Create long-term
Slide 51: Integrating proprietary data to drive unique insights across the portfolio
Integrating propriety data to drive unique insights across the portfolio Optimizing trademark strategies, saving time and cost, by combining case law and trademark data Managing competitive insight for Patents using patent Use case: Darts-ip: litigation data and analytics Acquired December 2019 Driv
Slide 52: Enabling Hewlett Packard to drive innovation
Enabling Hewlett Packard to drive innovation Unlock full potential of IP with integrated capabilities across the spectrum Transform IP assets and data into an efficient driver of Use case: business value Hewlett Packard Manage lifecycle of registered and unregistered patents and trademarks, identify
Slide 53: Partnering with BARDA to expedite drug discovery and repurposing
Partnering with BARDA in order to expedite drug discovery and repurposing through world-class technology and solutions Leveraging breadth of our research intelligence cloud to assess molecular pathways, drug safety and evaluate genomic experiments Biomedical Advanced Research and Using machine learn
Slide 54: Clarivate Investment Highlights
Clarivate Investment Highlights Richard Hanks Chief Financial Officer November 9, 2021
Slide 55: Investment highlights
Investment highlights Attractive • Four customer segments: ~$100B TAM industries • Segments growing from mid-single digits to mid teens • Resilient businesses, historically stable Balanced and • ~26,000 customers, top 10 representing only 6% of revenue diversified • 50% revenue Americas, 50% EMEA/As
Slide 56: Evolution since going public in 2019
Evolution since going public in 2019 Adjusted Revenue ($M) and Margin Progression $1,800 - $1,840 38% Seven businesses to 34% 44 - 45% two product groups 29% 30% $1,277 One Clarivate, $935 $951 $975 $795 - customer-led structure $825 $487 Significant increase in $320 $273 $294 capabilities and scale
Slide 57: Looking ahead: Our value creation drivers
Looking ahead: Our value creation drivers Organic revenue growth Margin expansion Lower capital intensity = Adjusted FCF growth 57
Slide 58: Organic revenue growth drivers
Organic revenue growth drivers Subscription 1 Re-occurring 2 Transactional and 3 professional services 58
Slide 59: Subscription revenue drivers: 55% of revenue base
Subscription revenue drivers: 55% of revenue base 1 Subscriptions TTM Sept 2021: High retention provides solid base for growth Catalysts for subscription growth: • Enhanced product capabilities + Retained Upgrades New Business retention rate improves 100bps base & price sales base (minimum per annum
Slide 60: Recurring revenue drivers: goal 5-7% annual growth
Recurring revenue drivers: goal 5-7% annual growth 2 Re-occurring revenue 25% of total base; highly-resilient model, essential services for customers; 99% customer retention Offerings Value proposition Trademark • Premium provider / category leader with network of 1,000+ agents and 200+ PTOs renewal
Slide 61: Patent market activity that supports our growth
Patent market activity that supports our growth 2 Re-occurring revenue 2005–2019 average annual growth rate 2009-2019 growth of Patent filing and grant trend annual patents in force Long-term 6.5% Patents in force 5.8% performance grew every year 4.7% underpinned by 2.9% in last decade, sustained pa
Slide 62: Transactional revenue drivers: 10-15% annual growth
Transactional revenue drivers: 10-15% annual growth 3 Transactional revenue 20% of total base; critical value-add services across research, innovation and IP lifecycle EPV filings, Professional Trademark Data Offerings recordals and services search sales patent search Near-term • Growing HEOR/Market
Slide 63: Clarivate near-term projected organic growth, all revenue streams
Clarivate near-term projected organic growth, all revenue streams Subscription growth 5-7% Re-occurring growth 5-7% Transactional and 10% professional services Total organic growth 6.5% – 7.5% 63
Slide 64: Expenses, Capex and Margins
Expenses, Capex and Margins © Clarivate”
Slide 65: We have built the platforms needed to scale the business and drive margins
We have built the platforms needed to scale the business and drive margins ever higher Product platforms: scaled cloud infrastructure Scaled application development centers plus “in-sourced” development Best of breed, scalable content ingestion platform Scale in best cost locations: India, Serbia In
Slide 66: Expense savings program is driving efficiencies across the business
Expense savings program is driving efficiencies across the business Completed Permanent Total savings through Timing savings Sept. 2021 ($M) 2019 cost savings $75M $75M $75M Completed program COVID related $30M At least $5M $5M Completed DRG synergies $30M $30M $30M Completed CPA Global Savings - $1
Slide 67: Targeting ever higher EBITDA Margins and free cash flow
Targeting ever higher EBITDA Margins and free cash flow 47% - 48% 50% 44 – 45% 38% 34% 30% Adj EBITDA Margin1 29% $487 $795 - $825 Improvement (%) & $320 $294 $273 Adj EBITDA1 growth ($M) 2 2017 2018 2019 2020 2021E Near-term Medium goal term goal $450 - $500 60% minimum $302 EBITDA to Total Adj Fre
Slide 68: Long-term sustainable value creation
Success = Long-term, sustainable value creation Revenue Mid- to high-single digit % growth range Retention rate/ new products/ subscriber growth + Patent volume growth + Professional services & data strategy + Pricing initiatives Adj EBITDA High-40s % range margin Cost discipline + Process simplific
Slide 69: Notes regarding the timing of ProQuest Closing
Notes regarding the timing of ProQuest Closing • We are cooperating fully with the FTC staff in their review of the Clarivate/ProQuest transaction • We continue to remain hopeful we will close the acquisition before the end of 2021 • While the acquisition has not closed, we are providing guidance fo
Slide 70: Our fundamental assets are unmatched
Our fundamental assets are unmatched Business model with strong financial attributes Multiple levers to drive growth, profit and cash flow Products critical to customers’ workflows One Clarivate – intentional actions to address significant white space Strong, purpose-based culture in place with expe
Slide 71: Appendix
(S Clarivate” APPENDIX
Slide 72: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures This presentation contains financial measures which have not been calculated in accordance with US GAAP, including Adjusted Revenues and Adjusted EBITDA, because they are a basis upon which our management assesses our performance and we believe the
Slide 73: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Adjusted EBITDA The use of Adjusted EBITDA instead of US GAAP measures has limitations as an analytical tool, and you should not consider Adjusted EBITDA in isolation, or as a substitute for analysis of the Company’s results of operations and opera
Slide 74: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Adjusted Net Income and Adjusted Diluted EPS We use Adjusted Net Income and Adjusted Diluted Earnings Per Share ("Adjusted Diluted EPS") in our analysis of the financial performance of the Company. We believe Adjusted Net Income and Adjusted Dilute
Slide 75: Presentation of Certain Non-GAAP Financial Measures
Presentation of Certain Non-GAAP Financial Measures Free Cash Flow and Adjusted Free Cash Flow We use free cash flow and adjusted free cash flow in our operational and financial decision-making and believe free cash flow and adjusted free cash is useful to investors because similar measures are freq
Slide 76: Diluted Share Count
Diluted Share Count Comments Note: The analysis is not intended to replace the Treasury Stock Method as required under ASC 260, Earnings per Share 1. Inconsistent with the requirements of ASC 260, but for illustrative purposes, this analysis uses hypothetical shares prices and not the actual average
Slide 77: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Adjusted revenues, net and organic adjusted revenues, net Twelve Months Ended December 31, Descriptions (in millions) 2020 2019 2018 2017 Adjusted EBITDA adjustments Revenues, net $ 1,254.0 $ 974.4 $ 968.5 $ 917.6 Deferred revenues adjustment(1) 23.1 0.4
Slide 78: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Descriptions Twelve Months Ended December 31, (in millions) 2020 2019 2018 2017 Adjusted EBITDA adjustments Net loss attributable to ordinary shares $ (311.9) $ (258.6) $ (242.2) $ (263.9) 1. Reflects the deferred revenues adjustment as a result of purch
Slide 79: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures Net Cash Provided By (Used In) Operating Activities to Free Cash Flow and Adjusted Free Cash Flow Twelve Months Ended December 31, Descriptions (in millions) 2020 2019 2018 Free Cash Flow and Adjusted Free Cash Flow Adjustments Net cash provided by (used
Slide 80: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted Revenues, net for the Outlook for 2021 and reconciles this measure to Revenues for the same period: Adjusted Revenues, Net Year Ending December 31, 2021 Descriptions (Forecasted) (in millions) Low
Slide 81: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted EBITDA and Adjusted EBITDA Margin for the Outlook for 2021. Adjusted EBITDA Year Ending December 31, 2021 Descriptions (Forecasted) Low High 1. Dividends on our mandatory convertible preferred shar
Slide 82: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Adjusted Diluted EPS for the Outlook for 2021 and reconciles this measure to our Net loss for the same period: Net Loss Per Fully Diluted Weighted Shares Outstanding to Adjusted Diluted EPS Year Ending Dece
Slide 83: Reconciliation of Non-GAAP Financial Measures
Reconciliation of Non-GAAP Financial Measures The following table presents our calculation of Free Cash Flow and Adjusted Free Cash Flow for the Outlook for 2021 and reconciles this measure to our Net cash provided by operating activities for the same period: Net Cash Provided by Operating Activitie